I write about business and regulatory aspects of blockchain and crypto

Douglas Maughan, cyber security division director, Science and Technology Directorate, Department of Homeland Security, testifies before the House Science and Technology Subcommittee on May 8, 2018U.S. House of Representatives

A Department of Homeland Security official issued a series of subtle warnings Tuesday morning at a congressional hearing that excessive hype and an arms race among blockchain vendors is hindering the technology’s implementation at a high level.

Douglas Maughan, Science and Technology Division Director at the U.S. Department of Homeland Security, told the U.S. Science and Technology Committee in testimony that organizations, such as his, that are actively testing blockchain technology are in desperate need of “vendor-neutral guidance and best practices” on how it can be most effectively deployed.

He wrote in his written testimony to the hearing, which examined blockchain's role in supply chain management and combating counterfeit goods:

“Such unbiased knowledge and implementation expertise is in very short supply, which will likely have significant impact on adoption.”

Maughan also called out vendors over a lack of adherence to or cohesion around any best practices in solution implementation and design, thus creating a myriad of action and knowledge asymmetries.

“In the race to achieve technological advantage and market share, decision criteria to evaluate the appropriate blockchain technologies [that] are indeed appropriate for a particular situation are neglected,” he explained.

Taken together, these factors have spawned an “increasing tension between business/system owners, both in the private sector and public sector, and their technology and solution providers,” Maughan continued, as vendors’ drive to push their particular blockchain solutions frequently comes in conflict with a client’s goals, such as creating an open architecture system.

Maughaun added:

“Technology providers may recommend a replacement strategy to implement their blockchain, which runs counter to the business/system owners desire for new technology to integrate with their current business processes and technology to preserve and leverage existing investments.”

Further, he warned that the widespread implementation of a myriad of closed permissioned blockchain networks without the existence of a common set of interoperability standards and best practices would simply recreate existing data-siloing issues, exacerbate vendor lock-in headaches and inhibit the development of a competitive marketplace of solutions for government and industry to tap into.

“[A] very real concern in the current timeframe of blockchain technologies is the potential for the development of 'walled gardens' or closed technology platforms that do not support common standards for security, privacy, and data exchange,” Maughan said, noting that his agency is currently working to tackle the standards and interoperability questions.

The degree of hype surrounding the technology has also created a steady flow of government entities knocking on Maughan's door in pursuit of blockchain solutions for problems that do not actually require blockchain.

"They oftentimes don’t need a blockchain," he explained during the hearing. "They can solve their problems with a database or other accounting instruments."

When asked whether blockchain could help in securing the integrity of voting systems, he noted that in its current state, the technology would not resolve any of the existing complexities:

"Voting is probably not a palace where we would use blockchain technology."

Criticisms notwithstanding, Maughan was highly bullish on the potential that the technology offers government, touting potential use cases such as streamlining trade and customs processes, securing international passenger processing and mitigating forgery and counterfeiting of official documents and signatures:

“From a government perspective, the technology holds the potential for enhanced transparency and auditing of public service operations, greater supply chain visibility to combat the distribution of counterfeit products, and automation of paper-based processes to improve delivery of services to organizations and citizens.”

I am a journalist and strategic communications professional in the blockchain and cryptocurrency space. I previously served as Washington correspondent at CoinDesk, where I covered the business applications and legal and regulatory aspects of blockchain technology and crypto...